October shows slowdown in membership, loan growth: MCUEs

December 4, 2018

Credit union lending and membership growth slowed in October, perhaps in anticipation of the 2018 holiday season, according to the latest CUNA Monthly Credit Union Estimates.

Credit union loan and membership growth often slow in October before ramping up again during the Holiday season in November and December,” said Jordan van Rijn, CUNA senior economist. “This year was no exception: the October monthly estimates show that monthly membership and loan growth fell to 0.24% and 0.73%, respectively, from 0.44% and 1.03% in September.

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“However, both of those figures are faster than last October, and the growth in memberships is actually the fastest October increase since 1996,” van Rijn added. “Memberships are now on pace to grow near 5 % for the year—potentially the largest percentage increase in credit union memberships since the 1980s—and loans are on pace for yet another double-digit year of over 10%.

Other mortgage loans led loan growth during the month, rising 3%, followed by home equity loans (2.3%), adjustable-rate mortgages (2.1%), unsecured personal loans (1.2%), new auto loans (0.7%), credit card loans (0.5%), and used auto loans (0.4%). On the decline during the month were fixed-rate mortgages (1.7%).

“This was the first month of negative growth in first mortgages since February 2015,” van Rijn said. “However, this is no surprise given the rise in interest rates: as of October 2018, the average 30-year fixed mortgage rate was 4.86%, up from 3.94% just a year prior. First mortgages are now on pace to increase 8.8% for the year, which would be the slowest annual growth in first mortgages since 2013. We expect this trend to continue as the Fed continues to raise rates this year and next.”

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Credit union savings balances declined -0.1% in October, compared with a 0.4% increase in September. One-year certificates led savings growth during the month, rising 1.8%, followed by money market accounts (0.4%), and individual retirement accounts (0.1%). On the decline during the month were share drafts (2.6%) and regular shares (-0.5%).

Van Rijn also noted that over the past 12 months, the most common reported interest rates on auto loans have risen from 3.10% to 3.70% for new auto loans, and from 3.77% to 4.19% for used auto loans. “However, unlike with mortgages, rising interest rates are not affecting demand for auto loans to any significant degree: total auto loans rose 0.51% in October and are on pace to jump 11.7% for the year, which would be an even faster increase than last year’s pace of 11.3%,” he said.

Credit unions’ 60-plus day delinquency declined to 0.6% during October from 0.7% in September.

The loan-to-savings ratio increased to 85.8% in October from 85.1% in September. The liquidity ratio (the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities) declined to 12.0% in October from 12.5% in September.

The movement’s overall capital-to-asset ratio remained at 10.8% in October. The total dollar amount of capital increased 0.5% to $159.1 billion.

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